Annual report 2010 - Imperial Tobacco Group

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Corporate Governance ReportOur commitment to maintaining highstandards of corporate governance andbusiness conduct remains fundamentalto ensuring our long-term sustainability.Strategy Performance Governance FinancialsIntroductionWe remain committed to high standards of corporateconduct and this report, together with the Directors’Remuneration Report, seeks to explain how in practicewe apply the principles of good governance advocated bythe Combined Code on Corporate Governance publishedin June 2008 (the Code). This report also includes theinformation required by the Disclosure and TransparencyRules (DTR) 7.2 to be contained in the Company’s corporategovernance statement, with the exception of the informationrequired by DTR 7.2.6, which is located on page 144.The Code sets out governance recommendations and bestpractice provisions which apply to UK listed companies andwith which companies must either comply or provide anexplanation for areas of non-compliance. The Code ispublicly available on the Financial Reporting Council’swebsite www.frc.org.uk.It is the Board’s view that the Company has been fullycompliant with the Code throughout the 2009/2010financial year.In light of the UK Corporate Governance Code (theRevised Code) published in June 2010 we are reviewingand, if appropriate, will enhance our governance and internalcontrol processes. As advocated by the Revised Code, weare introducing annual re-election for all Directors with effectfrom our Annual General Meeting (AGM) in 2011 and, inaddition, we are proposing a resolution to amend our Articlesof Association accordingly.How we meet our governanceresponsibilities in practiceA. Directors1 The Board: How do we ensure the Company is headedby an effective, collectively responsible Board?2 Chairman and Chief Executive: How do we ensure noone individual has unfettered powers of decision?3 Board balance and independence: How dowe ensure a sensible balance of Executive andNon-Executive Directors?4 Appointments to the Board: How rigorous is ourprocedure for the appointment of new directors tothe Board?5 Information and professional development: How do weinduct and regularly inform our Board?6 Performance evaluation: How do we formally evaluateour Board and Committees’ performance annually?7 Re-election: How do we ensure planned andprogressive refreshing of the Board?B. Remuneration1 The level and make-up of remuneration: What isour approach to remuneration and how do we linkit to performance?2 Procedure: What is our formal procedure for developingour policy on executive remuneration?C. Accountability and audit1 Financial reporting: How do we ensure wepresent a clear and balanced assessment of theCompany’s position?2 Internal control: What does our Board do to maintaina sound system of internal control?3 Audit Committee and Auditors: How do we formallyapply financial reporting and internal control principles?D. Relations with shareholders1 Dialogue with institutional shareholders: How doesour Board ensure that a satisfactory dialogue withshareholders takes place?2 Constructive use of the AGM: How does the Boardeffectively use the AGM to engage with investors?58
Management and Corporate StructureBoardChairman andNon-ExecutiveDirectorsRemunerationCommitteeNominationsCommitteeAuditCommitteeChief Executiveand ExecutiveDirectorsDisclosureCommitteeChief Executive’sCommittee*OperatingExecutive*DevelopmentExecutive*RiskCo-ordinationCommittee* From 1 October 2010 the Chief Executive’s Committee was replaced by the Operating Executive and Development Executive.A. Directors1 The Board: How do we ensure the Company isheaded by an effective, collectively responsible Board?Board and Board CommitteesBoard StructureThe Board met six times during the year (with two of themeetings having a duration of two days) and is scheduledto meet five times in the 2010/2011 financial year.Our Directors for the year to 30 September 2010 areshown on page 60. Their biographies, on pages 56 and 57,demonstrate a detailed knowledge of the tobacco industryand the wider fast-moving consumer goods (FMCG) sector.This is supported with a wide range of international businessand financial experience which is vital to our ongoingdevelopment and long-term sustainability. Their biographiesalso include details of any other major directorships.Board OperationsThe Board is our principal decision making forum andmanages overall control of the Group’s affairs. Key to thiscontrol is the schedule of matters on which the Boardalone may make decisions. These include approving ourcommercial strategy, corporate plans, major corporateactivities and our financial statements, together withdividends. In addition, it is only the Board who can appointand remove Directors and our Company Secretary.To ensure the effective operation of our Board, the GeneralCounsel & Company Secretary (from 1 October 2010 GroupCorporate and Legal Affairs Director) provides advice on allgovernance and regulatory matters. He also assists theChairman and Chief Executive in setting the agenda foreach Board and Committee meeting.All Directors are equally accountable to our shareholdersfor the proper stewardship of our affairs and the successof the Company. All Board and Committee meetings duringthe year were held in an open atmosphere with chairmenDirector industrybackground/experienceNo.23Tobacco 3Manufacturing11FMCGLegal311Energy2359
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Imperial Tobacco Group PLCAnnual Re
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…to deliver sustainableshareholde
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Operational HighlightsDelivering Su
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and product portfolio to evolving c
Page 9 and 10: In this section9 Strategic Review10
Page 11 and 12: Our StrategyWe are focused on deliv
Page 13 and 14: Total Tobacco5 % Our Powerful Brand
Page 15 and 16: Our global strategic cigarette bran
Page 17 and 18: Our global team is fully aligned be
Page 19 and 20: Satisfying consumers and aligning o
Page 21 and 22: We are a responsive business with s
Page 23 and 24: Operating responsibly, combined wit
Page 25 and 26: Our growth drivers of sales growth,
Page 27 and 28: Principal Risks and UncertaintiesA
Page 29 and 30: Competition LawOverviewWe take comp
Page 31 and 32: Reconciliation of Adjusted Performa
Page 33 and 34: Key Performance Indicators (KPIs) 1
Page 35 and 36: Lambert & Butler and Richmond remai
Page 37 and 38: Within this the travel retail marke
Page 39 and 40: OutlookThe strength of our portfoli
Page 41 and 42: Blondes. In the Middle East, we aga
Page 43 and 44: Corporate ResponsibilityOur Corpora
Page 45 and 46: Corporate Responsibility and our St
Page 47 and 48: We have revised our IMS and employe
Page 49 and 50: Environmental Performance 1Absolute
Page 51 and 52: across the business. More informati
Page 53 and 54: Supplier RelationshipsOur main supp
Page 55 and 56: Non-financial performance indicator
Page 57 and 58: “High standards of corporategover
Page 59: 5. Pierre Jungels, CBE (HON), PHD,
Page 63 and 64: Meetings of the Board, Board Commit
Page 65 and 66: and supplemented by our Non-Executi
Page 67 and 68: 6 Performance evaluation: How do we
Page 69 and 70: The Board recognises that we operat
Page 71 and 72: Assurance process for financial rep
Page 73 and 74: - receiving reports from, and quest
Page 75 and 76: Directors’ Report: Other Informat
Page 77 and 78: - state whether IFRSs as adopted by
Page 79 and 80: We understand that a purported coll
Page 81 and 82: This Report covers the following:1
Page 83 and 84: 2 Directors’ Emoluments for the Y
Page 85 and 86: Directors’ Interests in Ordinary
Page 87 and 88: Executive Directors’ Service Agre
Page 89 and 90: When setting base salary the Remune
Page 91 and 92: First ElementFifty per cent of the
Page 93 and 94: In respect of the October 2007 - Oc
Page 95 and 96: Any annual bonus earned up to 100 p
Page 97 and 98: Benefit Trusts have also been provi
Page 99 and 100: Independent Auditors’ Reportto th
Page 101 and 102: Consolidated Statement ofComprehens
Page 103 and 104: Consolidated Statement of Changes i
Page 105 and 106: Accounting PoliciesBasis of Prepara
Page 107 and 108: Duty and Similar ItemsDuty and simi
Page 109 and 110: InventoriesInventories are stated a
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Restructuring CostsSignificant one-
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Property, Plant and Equipment and I
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Tobacco net revenue£ million 2010
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3 Restructuring Costs£ million 201
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Factors affecting the tax charge fo
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9 Intangible Assets2010£ million G
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10 Property, Plant and Equipment201
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13 Trade and Other Receivables2010
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Sensitivity analysisIFRS 7 requires
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At 30 September 2009Balance sheetam
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(iii) Currency analysis and effecti
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(iv) Derivative financial instrumen
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Matures in financial year ending in
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The following tables are provided i
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Matures in financial year ending in
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(vi) Hedge of net investments in fo
Page 143 and 144:
18 Retirement Benefit SchemesThe Gr
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Assumptions regarding future mortal
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21 Share SchemesThe Group recognise
Page 149 and 150:
Year from 1 October 2008 to 30 Sept
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23 CommitmentsCapital commitments£
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27 Reconciliation of Cash Flow to M
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Imperial Tobacco Group PLC Balance
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(iii) Debtors: Amounts Falling Due
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Principal SubsidiariesThe principal
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Shareholder InformationRegistered O
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IndexAAccounting Policies 103Acquis
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Annual report 2010 - Imperial Tobacco Group

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